29 November 2024
On 21 November 2024 the Central Bank of Ireland (‘CBI’) released the details of a Settlement Notice under the Administrative Sanctions Procedure (‘ASP’) against BlueSnap Payment Services Ireland Limited (“BlueSnap”), a Payments Institute (“PI”). BlueSnap agreed to the settlement on an Undisputed Facts basis in relation to contraventions of the European Union (Payment Services) Regulations 2018 (‘PSR’) that occurred between January 2021 and December 2022.
BlueSnap gained authorisation from the CBI as a PI on 23 December 2020 to provide “merchant acquiring services”.
BlueSnap is a subsidiary of BlueSnap Inc, a US based company. Prior to Brexit, there was an entity in the UK which dealt with all payment processing in the EEA. The Irish entity was established and authorised in order to continue providing services to the EEA region.
As a PI, BlueSnap is subject to specific safeguarding requirements contained in the PSR. Client funds must not be mixed with the firm’s own funds or with those of any other fund. The PSR also sets out an obligation on PIs to inform the CBI if there are any changes to the information used to gain authorisation.
BlueSnap informed the CBI on 30 April 2021 that they had deposited funds in the UK accounts in the name of a different group entity. This is contrary to the PSR and following this, the CBI liaised with BlueSnap in relation to their regulatory and governance obligations.
In February 2022 BlueSnap made another disclosure to the CBI that it:
The CBI were concerned that there may have been breaches of the PSR and instigated an investigation.
The CBI found that BlueSnap had breached multiple requirements of the PSR by:
It was determined that these failings were a result of inadequate understanding of regulatory requirements and associated reporting obligations, in addition to subpar oversight and monitoring by BlueSnap of its safeguarding operations which were provided by the BlueSnap group.
BlueSnap accepted the facts on an Undisputed Facts basis and on conclusion of the CBI investigation, it was decided that the appropriate sanction was a combination of a reprimand and a monetary penalty of €463,200. This figure then had the 30% discount applied to it under the undisputed facts scheme, which reduced the final penalty down to €324,240. This sanction will take effect when confirmed by the High Court. It should be noted that there was no mention of any personal sanctions against senior executives in the Settlement Notice.
BlueSnap has confirmed to the CBI that it has remediated the safeguarding failures which were the subject of the prescribed contraventions.
Any party preparing to engage with the Central Bank on an investigation or enforcement action where they could be the subject of the exercise of a regulatory power, should approach those engagements with the necessary understanding of the relevant legal issues, including the operation of the principles of natural justice, and the requisite level of preparation and expert professional support.
Although there was no mention of any individual sanction in the Settlement Notice, it should be noted that the CBI can review personal liability under the IAF and SEAR frameworks. For more information on this please see some of our published articles listed below.
Experienced lawyers from KPMG Law LLP’s Financial Services Regulation team can provide firms and individuals with confidential legal advice on these issues. If you have any regulatory or enforcement queries, please do not hesitate to contact our team below.
